GlaxoSmith Consumer can give 25% return: Agarwal

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GlaxoSmith Consumer can give 25% return: Agarwal

Hitesh Agarwal of Angel Broking is of the view that GlaxoSmithKline Consumer Healthcare can give 25% return over the next 12 months. It is a leader in the domestic malted beverage market, which is close to Rs 1600 crore. The company has a 70% market share in the malted beverage market.

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See previous views by Hitesh Agarwal See what other Experts & Brokerages are saying about GlaxoSmith Con See messages about GlaxoSmith Con GlaxoSmith Con BSE | NSE 28/05/12 Are Mutual Funds betting on GlaxoSmith Con?

Hitesh Agarwal of Angel Broking is of the view that GlaxoSmithKline Consumer Healthcare can give 25% return over the next 12 months. It is a leader in the domestic malted beverage market, which is close to Rs 1600 crore. The company has a 70% market share in the malted beverage market.

Agarwal told CNBC-TV18, "GSK Consumer is a leader in the domestic malted beverage market, which is close to Rs 1600 crore. The company has a 70% market share in the malted beverage market. It has two strong brands like Horlicks and Boost, which has stood competition by the year because of innovative strategies and better positioning of their products in the markets especially in the south Indian market, which is a high malted beverage consuming market. So going forward we expect the company to not only strengthens its existing portfolio but also get into newer segments and we also expect the company to launch newer products from its parent portfolio. We expect this to happen by the end of the current calendar year or early next year, which will be an added advantage to the company's portfolio."

He further added, "Apart from this if one looks at the company's balance sheet as the end of September 2007, the company had cash, which was equivalent to Rs 460 crore which works out to Rs 110 per share. So that is a comfortable cushion if one wants to call it for the stock price. From the valuation point of front the company is available at less than 15x CY2008 earnings and if compares it to other larger listed peers they are trading anywhere between 18-22x. So considering that the company is expected to grow on the topline at 15-16% CAGR over the next couple of years and bottomline of 22-23% CAGR, we expect the stock to return at least 25% over the next 12 months."

Disclosure: Analyst doesn't hold the above stock.